Cost Transfer Policy

Definition of a Cost Transfer

A cost transfer is a procedure by which a cost originally charged elsewhere
is moved to another account in order to allocate the cost properly. It is the
expectation of Clark University that Principal Investigators (PIs) understand
the importance of regularly reviewing their research accounts and ensuring that
allowable costs are charged initially to their appropriate funding sources. It
is the PI's responsibility to oversee the financial management of their projects
to avoid the need for cost transfers. However, in the cases where cost transfers
become necessary, each one must be fully justified with appropriate
documentation.

Cost transfers typically may be necessary in the following cases:

When an error occurred in the original charge including allocation to an
inappropriate account or inappropriate allocation of an unallowable cost

Where the cost benefits more than one sponsored agreement because the
work is closely related such that the initial charge could have been made
appropriately to the other sponsored account and the justification of the
transfer is sufficient

When pre-award spending appropriate under the guidelines of the
Office of Management and Budget (OMB) Circular A-110 (Uniform
Administrative Requirements for Grants and Other Agreements with
Institutions of Higher Education, Hospitals and Other Non-Profit
Organizations) occurred and those costs need to be transferred to the
sponsored account

Cost transfers are never appropriate in the following circumstances:

As a cost management strategy or for the convenience of the PI

To avoid cost overruns or to use unspent funds

When to do so would conflict with the policies and guidelines
established by the OMB and the funding agency

Cost Transfer Policy and Procedures

All cost transfers of expenses and/or salaries should be completed
immediately after the original transaction (when the charge was posted to the
account), and are required to occur within 90 calendar days of the original
transaction. The
Journal Entry Transfer Request Form should be completed and
signed by the PI and forwarded to Grants Accounting. The PI will need to supply
answers to the following questions on the
Journal Entry Transfer Request Form
(please enter responses in the “Explanation” section of the form):

Why was this expense originally charged to the account from which it is
now being transferred?

Why should this charge be transferred to the proposed receiving account?

How was the error discovered? What is being done to prevent this from
recurring?

If this request is being made after the required 90 day window: Why is
this cost transfer being requested more than 90 calendar days after the
original transaction?

Full explanations are required in the justification and statements such as
“administrative oversight” or “did not know how to process the charges” should
be avoided and may result in the denial of the transfer request. Departments may
be held responsible for charges that are deemed unallowable or not allocable to
the sponsored account.

Cost transfers over 90 calendar days will be highly scrutinized and will
require the approval of your Department Chair and the Dean of Research. In these
cases, the
Journal Entry Transfer Request Form should be completed and sent with
appropriate documentation to the Office of Sponsored Programs and Research (OSPR)
for review and signature by the Dean of Research.

Please note that salary cost transfers require OSPR approval and may require
a recertification of the PI’s Time and Effort reporting. In these cases, the PI
should contact OSPR for approval and to complete this recertification.

Rationale for the Cost Transfer Policy and Procedures

Clark University is responsible for managing all funds in a manner consistent
with the standards set by the Office of Management and Budget (OMB), as well as
with all applicable guidelines and policies set by the funders. Complete and
timely execution and justification of cost transfers is required for direct
costs to be considered both allowable and allocable under
OMB
Circular A-21 (Cost Principles for Educational Institutions). OMB A-21 also
states that, “Any costs allocable to a particular sponsored agreement…may not be
shifted to other sponsored agreements in order to meet deficiencies caused by
overruns or other fund considerations, to avoid restrictions imposed by law or
by terms of the sponsored agreement, or for other reasons of convenience.”

Cost transfers are often reviewed by our auditors as well as by federal
agency officials. Frequent, late and/or poorly justified cost transfers, as well
as significant and questionable activity toward the end of an award period,
could result in the denial of reimbursement and/or could bring the PI’s and the
University’s compliance into question potentially putting the PI and/or the
University at risk of administrative and/or financial sanction.

Please address any questions on this policy and related procedures to the
Office of Sponsored Programs and Research or Grants Accounting.